Don’t Write Off America in 2012

Jan. 16, 2012 - 01:34PM
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One of the staples of 2011 punditry has been the “decline” of the United States. See Google’s 190,000,000 results in 0.26 seconds for “U.S. decline in power.”

China in particular, pundits say, is about to eat our economic lunch, and all that’s left for us is to figure out how to slide gracefully into irrelevance.

True, the economy isn’t great. That’s in part because the administration failed to invest in the one area of manufacturing that can be done only by American workers who already exist — the defense industry — to replace and upgrade a decade’s worth of spent war materiel. Equally true, the administration is politically and militarily diminishing American leadership.

What could be better, he seems to say, than doing “America” bigger, better and more efficiently? Would that be “and” or “because” the Chinese government has no opposition?

Before you learn Mandarin, please note some storm clouds on China’s horizon and a few rays of sunlight on our own. Americans may have turned the corner on domestic energy, and China’s need for imported energy dwarfs ours.

It turns out governments without opposition don’t have brakes on their spending, either. Chinese banks are in trouble, its economy is slowing, its housing bubble is bursting and its need for energy is creating foreign policy difficulties in places as far flung as Sudan, Iran and the Spratley Islands.

The Washington Post recently chronicled the enormous debt acquired by China’s local governments, financed by government banks, for infrastructure and building projects that may not make financial sense, including mismatches between the “duration of the assets and the duration of the liabilities.”

A highway across Gansu province includes a 146-mile expressway across arid landscape to Jiayuguan; its revenue won’t cover the interest payments, let alone principal. There is a replica of the Olympic stadium in Shandong and a superhighway in the poor province of Yunnan, which has no large cities to connect.

But what really gets your attention is “A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour’s train ride from Beijing. ... 164 million square feet of office space ... more than one-third of the 450 million square feet in Manhattan.”

Who needs Manhattan except for us? Cities, sure; roads, of course. But Manhattan?

You can copy the buildings and even put it on a river, but without the creative energy that gave it Broadway, Chinatown (hmmm ...), FAO Schwartz, the Christmas window at Saks, the subway, the Yankees, the Carnegie Deli, the Brooklyn Bridge, MOMA and the Met, it won’t be Manhattan.

The Chinese are big on superhighways, but a highway is just a road. On the other hand, if you connect New York to Chicago to Detroit to Los Angeles to Houston to Atlanta and everything in between, you connect what we think to what we make to what we buy to how we live. The operative word is “we.”

Yes, our government has a hand in there (the Interstate Highway System is nothing to sneeze at), but what the Chinese are trying to copy are the inventions of free minds. They can’t do that, and governments can’t copy the energy and ingenuity that created the jobs to fill the spaces the highways allowed us to travel.

And can again.

While free minds are the most valuable energy source, there is also energy that comes from the ground. Here too are grounds for optimism. Stephen Moore wrote in The Wall Street Journal that “since 2005 America truly has been in the midst of a revolution in oil and natural gas, which is the nation’s fastest-growing manufacturing sector. ... Today, OPEC’s market share is falling and no longer dictates the world price. When OPEC was at its peak in the 1990s, the U.S. imported about two-thirds of its oil. Now we import less than half of it, and about 40 percent of what we do import comes from Mexico and Canada.”

A majority of Americans support the expansion of the Keystone Pipeline from Canada to the Gulf of Mexico. They understand that jobs are at stake, but also that greater freedom from Middle East oil would revolutionize America.

While China and Europe and others worry about the stability of governments and supplies in countries they can’t control any more than we could, the U.S. will be operating at home and within the friendly confines of the North American Free Trade Zone.